What happened
Shares of Snap Inc. (SNAP +0.85%) were sliding today, following the collapse last week of its two social-media peers, Facebook and Twitter, and on a broader sell-off in growth stocks. As of 1:40 p.m. EDT, Snap shares were down 4.4%.
So what
While there was no company-specific news out on the Snapchat parent, the sell-off comes ahead of Snap's second-quarter earnings report next week, and just after Facebook and Twitter both crashed by about 20% following their own earnings reports. Though each of those social-media companies sold off as a result of its own unique challenges, the investor response may underscore broader issues for the social-media sector, especially for Snap, which is still struggling to prove it can be a sustainably profitable company. And both Facebook and Twitter are down several points again today, weighing on Snap.
Snap shares had a similar slide on Friday, tracking with a two-day drop in growth stocks that has pushed the NASDAQ Composite Index down nearly 3%.
The explore function on Snap Map. Image source: Snap.
Now what
Snap will report second-quarter earnings on Aug. 7. Analysts are expecting revenue growth of 39% to $251.7 million, but a loss per share of $0.17 compared to $0.16.
Snap's shares are now down nearly 30% from its $17-per-share initial public offering price last year. User growth has slowed amid competition from Instagram, and its other businesses like Spectacles and Snapcash have mostly fallen flat.
Considering that the stock has fallen sharply after four out of its five earnings reports, shares remain at risk going into next week. While the company's revenue growth shows its appeal to advertisers, it will have to eventually deliver on the bottom line to justify its current $15 billion valuation.
